Global Diesel Prices Unlikely to Fall Despite U.S.-Russia Supply Deal
Global diesel prices will likely remain elevated despite a newly announced supply arrangement between Donald Trump and Vladimir Putin, according to energy experts interviewed by dw.com.
Geopolitical Conflicts Constrain Global Refinery Capacity
The primary driver behind elevated diesel prices is the war in Iran paired with the simultaneous blockades of the Strait of Hormuz and the Strait of Bab el-Mandeb, according to Samina Sultan, an expert in foreign trade at the German Economic Institute (IW) in Cologne. These disruptions create production losses and make maritime fuel transport significantly more expensive, less secure, and operationally difficult.
Furthermore, the supply arrangement creates complex geopolitical entanglements. Sultan notes that the agreement binds the wars in Ukraine and Iran closely together. Shipping data from maritime analytics firm Kpler shows that while approximately 13.5 million barrels of crude oil transit the Strait of Hormuz daily, the volume of refined products like diesel sits at roughly 677,000 barrels per day—a steep drop from the 3.6 million daily barrels recorded prior to the conflict.
Carsten Fritsch, a commodities analyst at Commerzbank, shares this assessment. He states that if the situation in Ukraine and the Middle East does not change, prospects for resolving these supply bottlenecks remain very low.
Contrasting Views on Trump’s Proposed Sanctions Relief
On October 9, Donald Trump announced that he would temporarily suspend sanctions against Russia to import Russian diesel. He claimed this step would drive prices down rapidly and at a record pace for American consumers and the broader global market.
The Kremlin confirmed the arrangement. On October 13, Kremlin spokesman Dmitry Peskov told Russian state news agency TASS that the diesel supply benefits Russia, the United States, and global energy markets alike.
Retail prices for diesel have surged dramatically across the United States and many European Union member states over the preceding twelve months. According to the U.S. Energy Information Administration (EIA), domestic prices have climbed by roughly 60 percent to reach $6.30 per gallon, which equates to about 1.49 euros per liter.
Structural Limitations of the Russian Fuel Supply Agreement
Even if Russia floods the global market with discounted fuel, analysts agree that prices will not drop by margins equivalent to their previous spikes. Refineries in the Gulf region have suffered substantial production disruptions, while utilizing unauthorized shipping fleets and acquiring marine insurance remains costly, cumbersome, and risky.
Moreover, Russia’s export standing has shifted. The nation is no longer the world’s leading diesel exporter, with domestic populations now facing internal fuel shortages. The United States currently holds the top position, exporting an average of 1.264 million barrels of diesel daily in 2025—accounting for roughly 15.4 percent of global exports. Russia has dropped to second place with a 9.5 percent market share.
Calculations from the platform Our World in Data indicate that an immediate delivery of 2.2 million barrels of Russian diesel would fail to cover even a single day of U.S. demand, which hovers around four million barrels. Rory Johnston, an analyst of the oil market, emphasized in a post on X immediately following the announcement that the volume is insignificante, noting that Russia would normally export nearly ten times that amount if its domestic refineries were not targeted by drone strikes.
Export Restrictions and North American Trade Realities
Imposing export restrictions in the United States would profoundly impact receiving nations in Latin America and the European Union. Since Russia’s attack on Ukraine, EU member states have increasingly sourced diesel from the United States to replace Russian imports barred by economic sanctions.
However, domestic export restrictions carry severe domestic repercussions. Carsten Brzeski, chief economist at ING, explains that a ban on exports merely redistributes scarcity rather than resolving it. Under such a policy, global market prices would continue to rise while domestic refiners curtailed production in response to shrinking profit margins.
Samina Sultan notes that proposed export curbs faced rejection largely because they risked triggering further price spikes within the United States. Given limited domestic storage infrastructure, refiners would be forced to cut production, driving retail prices upward.
Meanwhile, the United States relies heavily on its northern neighbor for fuel imports. Canada supplies approximately 80 percent of American diesel imports. Given recent trade frictions and verbal disputes originating from Washington, analysts view it as highly unlikely that Canadian authorities would agree to step up shipments to compensate for domestic shortfalls.
Keep reading
- Kathryn Streeter Reports on 1 Hotel Austin Opening
- Albuquerque Police Discover Vehicle Tied to Denton Homicide Investigation
- Producer prices in China rise at fastest pace since June 2022, beating expectations (newsylist.com)
- How Anduril's Steelfin Swaps Boosters to Undercut Patriot Prices (daybreakwire.com)